I am a law-talking guy after all!

The Supreme Court handed down a decision in Stoneridge v. Scientific Atlanta yesterday. Your eyes are starting to glaze over, but wait! CFO.com quoted a G'Town law professor who called the decision the "Roe v. Wade" of securities law.

The scenario: A cable company, Charter, entered into sham transactions with Scientific Atlanta and Motorola to inflate earnings. Charter signed fake marketing agreements with the two companies (who were in on the whole thing) to boost Charter's revenue. It then gave them the money back by tacking on an additional $20 to each cable box that Charter bought. To hide the scheme, Charter backdated the cable box contracts.

The Suit: Plaintiffs sued Scientific Atlanta and Motorola, not just for business fraud (a state claim), but also for violations of the federal securities laws. Why? Because Charter's fraudulent revenue statements could not have been made but for the underlying fraud.

The decision: The Court stated that Plaintiffs could maintain fraud suits in state court but could not maintain suit for securities law violations. Why? Charter made a misstatement of its revenues to the public via an SEC filing and caused investors harm. The Court found that Scientific Atlanta and Motorola's acts in entering into the underlying fraudulent transactions were too far removed from that statement to have caused a violation of the securities laws.

The disclaimer: This is a very quick review of a complex court case. There is a lot of talk about the rightness/wrongness or effect of the decision. I am not touching any of that here.

Why it is on the blog: The comment that it is "Roe v. Wade." Um. No. This is hailed a win for business over the investor. In the general political perspective, a win for Wall Street is the inverse of Roe.

Perhaps it is "Roe"-like because it creates a new test or framework for deciding cases? Again, no. This case simply states that Congress did not intend to create a private right of action for aiding and abetting securities violations.

So we are left asking if it is like Roe merely because it is might be an iconic or watershed decision. That seems to be the case. If so, the good professor is just grandstanding, and that, I dare say, is a poor academic step.